Problem 11.3. Wine matures but eventually declines. The 2012 vintage of Pinot Noir in the Russian River Valley (Sonoma) matured to perfection in 2019, six years after it was bottled. That's when people uncorked the bottles and enjoyed the wine. Each row in the table below lists years since the 2012 vintage was bottled; for instance, t = 6 means 2019. Each column corresponds to a time-specific belief about the value of the wine in 2019. For instance, in 2012 (at t = 0), people believed the 2012 Pinot Noir would be worth $665 per case in 2019. The annual interest rate is 10 percent. [Round your calculations to the nearest dollar. Time-0 Time-2 Time-4 Time-6 column. Timet Belief Belief Belief Knowledge (c) The federal government relaxed a tariff on im- 0 ports of French wines. That was news at t = 4. 2 As a result, people believed that the 2012 Pinot 4 Noir would sell for $496 in 2019. On the basis of 6 665 the updated belief, enter the expected values at t = 4,6 in the next column. (a) On the basis on beliefs in 2012 (at t = 0), how much was a case of this wine worth (in present (d) As it turns out, the 2012 vintage was excellent, value terms) at t = 0, 2, 4. Enter these numbers and the case price was $750 when people enjoyed in the Time-0 Belie column the wine in 2019. Enter the known value (and price) in the last column of the table. (b) Some early tests suggested that 2012 would be a pretty good vintage. That information was (e) If people had known in 2012 that the wine would news at t = 2. Accordingly, the t = 2 belief sell for $750 per case in 2019, the case price would was that this vintage would be worth $700 per have been $ lower higher than it was case in 2019. On the basis of the updated belief, in 2012. enter the expected values at t = 2,4,6 in the next Problem 11.4. Some assets tend to pay high financial returns; returns to holding other assets are typically low. In the following table, use the letter X to indicate whether the listed feature of owning the asset pushes toward a lower or higher average return. Lower Higher Asset Feature Return Return house being able to live in it sports franchise being in the spot light / schmoozing with players stock future profits are very uncertain. government bond negligible risk of default fine art joy from viewing bonds of start-up firms high risk of default Problem 11.3. Wine matures but eventually declines. The 2012 vintage of Pinot Noir in the Russian River Valley (Sonoma) matured to perfection in 2019, six years after it was bottled. That's when people uncorked the bottles and enjoyed the wine. Each row in the table below lists years since the 2012 vintage was bottled; for instance, t = 6 means 2019. Each column corresponds to a time-specific belief about the value of the wine in 2019. For instance, in 2012 (at t = 0), people believed the 2012 Pinot Noir would be worth $665 per case in 2019. The annual interest rate is 10 percent. [Round your calculations to the nearest dollar. Time-0 Time-2 Time-4 Time-6 column. Timet Belief Belief Belief Knowledge (c) The federal government relaxed a tariff on im- 0 ports of French wines. That was news at t = 4. 2 As a result, people believed that the 2012 Pinot 4 Noir would sell for $496 in 2019. On the basis of 6 665 the updated belief, enter the expected values at t = 4,6 in the next column. (a) On the basis on beliefs in 2012 (at t = 0), how much was a case of this wine worth (in present (d) As it turns out, the 2012 vintage was excellent, value terms) at t = 0, 2, 4. Enter these numbers and the case price was $750 when people enjoyed in the Time-0 Belie column the wine in 2019. Enter the known value (and price) in the last column of the table. (b) Some early tests suggested that 2012 would be a pretty good vintage. That information was (e) If people had known in 2012 that the wine would news at t = 2. Accordingly, the t = 2 belief sell for $750 per case in 2019, the case price would was that this vintage would be worth $700 per have been $ lower higher than it was case in 2019. On the basis of the updated belief, in 2012. enter the expected values at t = 2,4,6 in the next Problem 11.4. Some assets tend to pay high financial returns; returns to holding other assets are typically low. In the following table, use the letter X to indicate whether the listed feature of owning the asset pushes toward a lower or higher average return. Lower Higher Asset Feature Return Return house being able to live in it sports franchise being in the spot light / schmoozing with players stock future profits are very uncertain. government bond negligible risk of default fine art joy from viewing bonds of start-up firms high risk of default